Financial Aid and Scholarships for Undocumented Students

What advice would you give on financial aid to undocumented students?
— T.T.

Before discussing financial aid for undocumented students, it is best
for students who believe that they are undocumented to first confirm
with their parents that they are indeed undocumented. A student who
was born in the United States or certain territories or outlying
possessions is a US citizen even if the student’s parents are
undocumented.

US Citizen Students with Undocumented Parents

US citizens and permanent residents are eligible for federal student
aid, regardless of the immigration status of their parents. If a
dependent student’s parents are undocumented, they should specify
000-00-0000 as their Social Security number (SSN) on the Free
Application for Federal Student Aid (FAFSA). They should not supply a
fake SSN, as that number will fail the FAFSA data match with the
Social Security Administration (SSA).

The student, as a US citizen, should have a legitimate SSN. If the
student does not have a SSN, the
student should apply for one by completing Form SS-5,
by providing original documents that prove student’s citizenship, age
and identity, such as the student’s birth certificate or US passport, and
by appearing in person at a Social Security Administration office for an
interview.

When one or more of the student’s parents are undocumented, the
student will not be able to use the
IRS Data Retrieval Tool
to complete the FAFSA. Instead, the student and the student’s parents
will be required to file IRS Form 4506-T
to have a tax return transcript mailed directly from the IRS to the
college financial aid office. Accordingly, if the parents’ income is
high enough that they would be required to file a federal income tax
return, they must file a federal income tax return and pay federal
income taxes.

To file a federal income tax return, each undocumented parent will need an
Individual Taxpayer Identification Number (ITIN). The ITIN is 9-digit
number, like the SSN, but with a 9 as the first digit.
To obtain an ITIN, each parent should file
IRS Form W-7
or
IRS Form W-7(SP).

The IRS and SSA do not share data with immigration authorities.

People who file federal income tax returns with an ITIN are not
eligible for the earned income credit. They are, however, eligible for
the American Opportunity Tax Credit (AOTC) based on amounts paid for
qualified higher education expenses. The AOTC is also known as the
Hope Scholarship Tax Credit. The student’s name and SSN or ITIN must
be listed on the parents’ federal income tax return for the parents to
claim the AOTC for the student.

Students who are US citizens are eligible for in-state tuition based
on residence in a state regardless of their parents’ immigration
status. This issue has nothing to do with whether or not
undocumented students are eligible for in-state tuition
and the controversy over state attempts to circumvent or side-step the
restrictions in the
Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA).
Several states have tried to treat these students, who are US
citizens, as out-of-state residents. A federal district court in Miami
recently overturned Florida state regulations adopted in 2010 and 2011 that
restricted eligibility for in-state tuition to students whose parents
are US citizens or permanent residents. The judge ruled that the
Florida regulations were unconstitutional on equal protection grounds,
since the regulations would have created two classes of citizenship. A
similar law in New Jersey was recently overturned by a state appeals court and
California settled a similar case in 2007.